Mincor Resources (MCR)

As the Otter Juan mine readies to slow production,
Mincor Resources
could mitigate concerns over operational longevity if it focuses on exploration and acquisitions to identify an alternate nickel source. Deteriorating ground conditions mean Otter Juan, which has contributed $131 million in pretax income since 2007, is expected to close three years early, in 2012.

Analysts at Deutsche Bank have tempered their bullish FY11 and FY12 production estimates by 10 per cent and 15 per cent, respectively. As a result, net present value has dropped by 20 per cent, to $1.57 per share. The “hold" recommendation has not been lowered at this stage.

The company’s $100 million cash reserve will be a temporary salve, part of which can be directed towards exploration and acquisitions. Assuming a long-term nickel price of $US7.71 a pound, Deutsche Bank has set its target share price equivalent to the NPV per share at $1.57.